Sourcing in China is the focus when western businessmen look for importing. The quest for ‘Cheap’ products seems to be a common one judging from the enquiries I receive, but I need to re-iterate:
CHEAP PRICES MEAN LOW QUALITY PRODUCTS.
A few days ago I received an email from an American importer asking if I knew of a manufacturer in China that could supply him with cheap USB sticks. I asked them for more information on specifications they required and they replied simply, “It doesn’t matter, as long as they are cheap”.
This is quite simply a recipe for disaster, and it is interesting that most people with this approach are new to importing. Most will not venture into importing again once if they receive their goods, which without doubt will be a pile of crap.
China is a manufacturing haven. You can pretty much order anything you want and you can be sure that there will be many suppliers providing exactly the same products, so you can go to an extent haggle over prices, but you must do it the right way.
The first question you should be asking a potential supplier is ‘can you provide this product to this specification?’ It even helps to add that you are looking for good quality. At this stage, price should be way down on your priority list.
Margins in the main are tight in China. It is not unheard of for a manufacturer to be working on a 1-2% margin. However, as soon as you say you want a cheap product, one of two things will happen: They will either dismiss you, advising you that they are not interested as in their eyes you are an obvious timewaster; or their eyes will light up. They will look at the product that you want for cheap, and strip whatever quality it may have had out of it, using the cheapest components, quickest manufacturing processes and absolutely zero quality control. They may however well end up making much more of a profit margin than they would have normally. Can you blame them?
Manufacturers need to make a decent profit to survive, and to invest in the next generation of product. Trends run like wildfire – As soon as a product looks to be ending its feasible life span, they will move on to the next product. The factory’s next door will probably be doing exactly the same thing, with the exact same product.
So, once your supplier advises they can supply the widget you are after, at your specification, that’s when you can start talking about price. Just be reasonable when coming to an agreement and bear in mind the margin the manufacturer is probably working to. At end of day, you get what you pay for.